International Journal of Industrial Engineering & Technology (IJIET) ISSN 2277-4769 Vol.

2, Issue 3 Dec 2012 7-14 TJPRC Pvt. Ltd.

COMBINED AHP- WSM BASED APPROACH FOR THE EVALUATION OF KNOWLEDGE SHARING CAPABILITIES OF SUPPLY CHAIN PARTNERS
1 1 2

MOHIT MAHESHWARKAR & 2N. SOHANI

Assist. Professor, R.I.T, Indore, Madhya Pradesh, India Reader, I.E.T, D.A.V.V,Indore, Madhya Pradesh,India

ABSTRACT
A supply chain (SC) consists of all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves. Supplier selection is one of the basic activities of Supply Chain Management (SCM). A best supplier for the firm is one who has implemented the concept of knowledge management successfully in his firm. Therefore the evaluation of knowledge sharing capability of suppliers becomes a task of prime importance. Such a case may be treated as a case of multi criteria decision making for the solution of which two Multi Criteria Decision Making (MCDM) techniques may be used. In present paper the use of Analytical Hierarchy Process (AHP) and Weighted Sum Model (WSM) is shown with an example. Firstly, the weights of criteria are calculated by using AHP, and then by implementing WSM, assessment of knowledge sharing capabilities has been done.

KEYWORDS: Supply Chain Management (SCM), Multi Criteria Decision Making (MCDM), Analytical Hierarchy
Process (AHP), Weighted Sum Model (WSM)

INTRODUCTION
Supply Chain Management (SCM) is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses and stores, so that merchandise is produced and distributed at the right quantities, to the right locations and at the right time in order to minimize system-wide costs while satisfying service level requirements (D. Simchi Levi, et al., 2000). A supply chain is a business process that links suppliers, manufacturers, retailers and customers and are

interrelated (R.Mishra, et al., 2002). In the field of supply chain research, collaboration and information technology are regard as two essential parameters in the integration and coordination of the network. (H.L. Leee and S. Whang, 2000 and R.B. Handfield and E.L. Jr Nichols, 1999). A variety of criteria appropriate for vendor selection have been developed in the past decades, but the information sharing capability of the supply chain partners was rare mentioned. It is especially important dimension since information technology is necessary to horizontally integrate geographically dispersed operations. Evaluation of the information sharing capability of potential supply chain partners can be considered as a multiple- attribute decision- making problem (Yang Zhong Hua and Tu Jing, 2009).Analytical Hierarchy Process (AHP), a commonly used quantitative research method, is the widely used evaluation indicator solution. AHP can quantify qualitative issues, which is effective to optimize the multi-level and multi- objective large- scale systems. Abroad, AHP is widely used in energy, resource allocation, program evaluation process, environmental prediction, evaluation, environmental protection norms, etc (GE Yan, 2009). The weighted sum model (or WSM) is probably the most commonly used approach, especially in single dimensional problems (P.C. Fishburn, 1967). The paper is organized in four sections. First, a review of knowledge sharing and knowledge sharing capability is presented. The

Mohit Maheshwarkar , & N. Sohani

methodology of the study is explained next followed by an illustrative application of combined AHP and WSM. Finally, a number of issues and future directions are summarized in the final sections of the paper.

LITERATURE REVIEW
Many researchers have provided taxonomies and frameworks to help practitioners and academicians to understand the concept of supply chain management. Over years, researchers have focused on the role of suppliers in supply chain management. A number of criteria appropriate for supplier selection have been developed in the past decades. Dickson firstly performed an extensive study to determine, identify and analyze what criteria were used in the selection of a firm as a supplier. Dicksons study was based on a questionnaire sent to 273 purchasing agents and managers selected from the membership list of the National Association of Purchasing Managers. His research work was based on 23 selection criteria (G.W. Dickson, 1966). Ellram described the factors that influenced firm choice of a supplier: financial, performance, technology, organizational culture and strategy, and other factors such as safety record, business references, and suppliers customer base (L.M. Ellram, 1990). In the review of Weber, the most mentioned criteria were price, delivery, quality, facilities and capacity, geographic location, and technical capability (C.A Weber, et al., 1991). Another study by Tullous and Munson discovered that quality, price, technical service, delivery, reliability, and lead time were among the most important selection factor (R.Tullous and J.M. Munson, 1991). Proceeding in the same direction, the review performed by Bross and Zhao concluded that the most valuable supplier selection criteria were cost, quality, service, relationship and organization. Simultaneously, many studies were conducted to identify the influence of the knowledge sharing capability of supply chain partners. Simultaneously, many studies were conducted to identity influences on knowledge management level of supply chain partners in terms of knowledge sharing capabilities(M.E Bross and G.Zhao, 2004). In 2004, M. Huysman and D. de Wit investigate Social Networks as an important criterion for knowledge sharing. In the year of 2007, Lin identified determinants of knowledge sharing attitudes and intentions. He classified them as extrinsic and intrinsic. In 2009, Zhong Hua Yang and Jing Tu proposed three criteria for knowledge sharing as corporate culture, Leadership and Information Technology. They sub classified these criteria in 13 different sub criteria. Criteria for the Evaluation of Information Sharing Capability of Suppliers In this research, the evaluation criterion has been developed on the basis of literature review and a series of informal discussions with the academicians and industry personnel. The details of the criteria for the evaluation of knowledge sharing capabilities are given as follows: Table 1: Evaluation Criteria for Suppliers (Yang Zhong Hua & Tu Jing, 2009 & M. Huysman, & D.Ke Wit, 2004) S.No 1. 2. 3. 4. 5. 6. 7. 8. Criteria Classification Top Management Support, Commitment & Encouragement Social Networks Vision and Goals Interpersonal Trust Open Leadership Climate Sharing Culture Data Management Capability Learning Orientation

Combined AHP- WSM Based Approach for the Evaluation of Knowledge Sharing Capabilities of Supply Chain Partners

METHODOLOGY
Analytical Hierarchy Process (AHP) The Analytic Hierarchy Process (AHP) is a structured technique for helping people deal with complex decisions. Rather than prescribing a "correct" decision, the AHP helps people to determine one. An AHP hierarchy is a structured means of describing the problem at hand. It consists of an overall goal, a group of options or alternatives for reaching the goal, and a group of factors or criteria that relate the alternatives to the goal. In most cases the criteria are further broken down into sub criteria, sub-sub criteria, and so on, in as many levels as the problem requires (Fig. 1).The hierarchy can be visualized as a diagram like the one below, with the goal at the top, the alternatives at the bottom, and the criteria filling up the middle. In such diagrams, each box is called a node. The boxes descending from any node are called its children. The node from which a child node descends is called its parent. Applying these definitions to the diagram below, the five Criteria are children of the Goal, and the Goal is the parent of each of the five Criteria. Each Alternative is the child of each of the Criteria, and each Criterion is the parent of three Alternatives (T. L Saaty, 1990, 1994).

Figure 1: Hierarchical Structure for AHP (T. L Saaty, 1977 & 1994) Once the hierarchy is built, the decision makers systematically evaluate its various elements, comparing them to one another in pairs. In making the comparisons, the decision makers can use concrete data about the elements, or they can use their judgments about the elements' relative meaning and importance. It is the essence of the AHP that human judgments, and not just the underlying information, can be used in performing the evaluations. For this purpose a pair wise comparison scale is used, which is shown in the Table.2 given below. After that AHP converts the evaluations to numerical values that can be processed and compared over the entire range of the problem. A numerical weight or priority is derived for each element of the hierarchy, allowing diverse and often incommensurable elements to be compared to one another in a rational and consistent way. Priorities are numbers associated with the nodes of the hierarchy. The priority of the Goal is taken as 1.000. The priorities of the children of any Criterion can also vary but will always add up to 1.000, as will those of their own children, and so on down the hierarchy. If the priorities within every group of child nodes are equal then the priorities are called Default Priorities. The priority of an attribute with respect to the ultimate goal is called Global Priority. The priorities indicate the relative weights given to the items in a given group of nodes. Depending on the problem at hand, "weight" can refer to importance, or preference, or likelihood, or whatever factor is being considered by the participants. This capability distinguishes the AHP from other decision making techniques. In the final step of the process, numerical priorities are derived for each of the decision alternatives. Since these numbers represent the alternatives' relative ability to achieve the decision goal, they allow a straightforward consideration of the various courses of action.

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Table 2: Pair Wise Comparison Scale (T. L Saaty, 1977, 1980 & P. Kumar, 2006) The Fundamental Scale for Pairwise Comparisons Intensity of Importance 1 Definition Equal importance Explanation Two elements contribute equally to the objective Experience and judgment slightly favor one element over another Experience and judgment strongly favor one element over another One element is favored very strongly over another; its dominance is demonstrated in practice

Moderate importance

Strong importance

Very strong importance

The evidence favoring one element over another is of the highest possible order 9 Extreme importance of affirmation Intensities of 2, 4, 6 and 8 can be used to express intermediate values. Intensities 1.1, 1.2, 1.3, etc., can be used for elements that are very close in importance. Saaty (1990 & 1994) has defined the following steps for applying AHP 1. 2. Define the problem and determine its goal, Structure the hierarchy with the decision makers objective at the top with the intermediate levels capturing criteria on which subsequent levels depend and the bottom level containing the alternatives, and 3. Construct the set of n n pair wise comparison matrices for each to the lower levels with one matrix for each element in the level immediately above. The pair wise comparisons are made suing the relative measurement scale (as discussed above). The pair wise comparisons capture a decision makers perception of which element dominates the other. 4. There are n(n-1)/2 judgments required to develop the set of matrices in step 3. Reciprocals are automatically assigned in each pair wise comparison. 5. The hierarchy synthesis function is used to weight the eigenvectors by the weights of the criteria and the sum is taken over all weighted eigenvector entries corresponding to those in the next lower level of the hierarchy. 6. After all the pair wise comparisons are completed, the consistency of the comparisons is assessed by using the Eigen value, , to calculate a consistency index, CI: CI = (-n)/ (n-1). Where n is the matrix size. Judgment consistency can be checked by taking the consistency ratio (CR) of CI with the appropriate value in Table 3, given below. Saaty [1980] suggests that the CR is acceptable if it does not exceed 0.10. If the CR is greater than 0.10, the judgment matrix should be considered inconsistent. To obtain a consistent matrix, the judgments should be reviewed and repeated.

Combined AHP- WSM Based Approach for the Evaluation of Knowledge Sharing Capabilities of Supply Chain Partners

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Table.3- Average Random Consistency Index Size of Matrix 1 Random Consistency 0 2 0 3 0.58 4 0.9 5 1.12 6 1.24 7 1.32 8 1.41 9 1.45 10 1.49

Weighted Sum Model (WSM) The weighted sum model (or WSM) is probably the most commonly used approach, especially in single dimensional problems. If there are M alternatives and N criteria then, the best alternative is the one that satisfies (in the maximization case) the following expression (P.C. Fishburn, 1967): AWSM*= max Nqijwj, for i= 1,2,3,,M. i j-1 (1)

where AWSM* is the WSM score of the best alternative, N is the number of decision criteria, aij is the actual value of the i-th alternative in terms of the j-th criterion, and Wj is the weight of importance of the j-th criterion. The assumption that governs this model is the additive utility assumption. That is, the total value of each alternative is equal to the sum of products given as (1). In single-dimensional cases, in which all the units are the same; the WSM can be used without difficulty (E.Triantaphyllou, et. al., 1998).

CASE STUDY
In present example the vendors selected for the analysis are three in nos. In this paper we test the knowledge sharing capability level of the different on the anvil of different criteria. The detailed evaluation plan is given as follows: 1. A Determine the priorities of different criteria using AHP. For this, Pairwise comparison between the different criterions is made and the criteria are assigned the values from 1 to 9 according to Pair wise comparison scale (T. L Saaty, 1977, 1980 and P. Kumar, 2006). After Pair wise comparison, the results of the comparison are represented in nn matrix form and the Eigen values of the matrix are evaluated along with the Consistency Ratio (CR) values. In this research work the AHP software is used. The details of priority values and CR value are mentioned in table 4. 2. Now in order to calculate the evaluation of knowledge sharing capabilities the questionnaires are circulated to the vendors which contain questions related to knowledge sharing activities. After that numerical weights are assigned to the vendors according to the entries provided by them. The Table 4 give gives the details. 3. Form the data generated in Table 5 the values of WSM Score for different suppliers A1 (WSM score) = 5.871 ; A2 (WSM score) = 6.92 BEST ALTERNATIVE A3 (WSM score) = 4.681

CONCLUSIONS
In this research paper, we have focused on the knowledge sharing capabilities of different suppliers. We reviewed different criteria and find the level of knowledge sharing capabilities of different suppliers. For such type of comparison

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the methods of AHP and WSM seem to be useful. From this research work, we can find that there are possibilities in the research for knowledge management activities of suppliers and constructive attempts should be made in this direction.

REFERENCES
1. Bross, M.E and Zhao, G. 2004.Supplier Selection Process in Emerging Markets: A Case Study of Volvo Bus Corporation in China, Master Thesis - School of Economics and commertial Law. Goteborg University. 2. 3. Dickson, G.W. 1966. An analysis of Vendor Selection Systems and Decisions, Journal of Purchasing,2 (1), 5-17. Ellram, L.M. 1990.The Supplier Selection Decision in Strategic Partnerships, Journal of Purchasing and Material Management, 26 (4), 8-12. 4. Fishburn, P.C.1967. Additive Utilities with Incomplete Product Set: Applications to Priorities and Assignments, Operations Research Society of America (ORSA) Publication, Baltimore, MD. 5. 6. Handfield, R.B. and Jr Nichols, E.L. 1999. Supply Chain Management, Englewood Cliffs, NJ; Prentice-Hall. Huysman, M. and ke Wit, D. 2004. Practices of Managing Knowledge Sharing: Towards a Second Wave of Knowledge Management, Journal of Knowledge and Process Management, 11(2), 81-92. 7. Kumar, P. 2006. Integrated Project Evaluation and Selection using Multi Attribute Decision Making Technique, International Journal of Production Economics,103, 90-103. 8. Leee, H.L., and Whang,S. 2000. Information Sharing in a Supply Chain, International Journal of Technology and Management,20 (),373-383. 9. Lin, H.F. 2007. Effects of Extrinsic and Intrinsic Motivations on Employee Intentions to Share Knowledge, Journal of Information Science, 33(2), 135-149. 10. Mishra, R., Sachin Lal., and Suman Das. 2002. Introduction to Supply Chain Management, Journal of Productivity, 42,531-538. 11. Saaty, T. L. 1977. Modeling unstructured decision problems: A theory of Analytical Hierarchies, Proceedings of the first International Conference on mathematical Modeling, 69-77. 12. Saaty, T. L. 1980. The Analytical Hierarchy Process, Mc Graw Hill, New York. 13. Saaty, T. L. 1990. How to make a decision: The Analytical Hierarchy Process, European Journal of Operational Research48, 9 26. 14. Saaty, T. L. 1994. Highlights and Critical Points in theory and application of the Analytical Hierarchy Process, European Journal of Operational Research, 74,426- 447. 15. Saaty, T. L. 1994. How to make a decision: The Analytical Hierarchy Process, Inferences, 24, 19-43. 16. Simchi Levi, D., Kaminsky, P., and Simchi Levi, E. 2000. Design and Managing the Supply Strategies and Case Studies. Tata Mc Graw-Hill Publishing Company Ltd, New Delhi. 17. Triantaphyllou, E., Shu, B., Nieto Sanchez, S. and Ray, T. 1998. Multi- Criteria Decision Making: An Operations Research Approach, Encyclopedia of Electrical and Electronics Engineering, (J.G. Webster, Ed.), John Wiley & Sons, New York, 15, 175-186. 18. Tullous, R. and Munson, J.M. 1991. Trade- offs Under Uncertainity: Implications for Industrial Purchasers, International Journal of Purchasing and Materials Management, 27(3), 24-31. Chain Concepts,

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19. Weber, C.A., Current, J.R., and Benton, W.C. 1991. Vendor Selection Criteria and Methods. European Journal of Operational Research, 50(1), 2-18. 20. Yan GE. 2009. Research on Green Suppliers Evaluation based on AHP & Genetic Algorithm, International Conference on Signal Processing Systems, IEEE Computer Society, 615-619. 21. ZhongHua Yang and Jing Tu. 2009. Evaluation of Information Sharing Capability of Supply Chain Partners, Proceedings of Forth International Conference on Computer Science & Education, IEEE,651-655. Table 4: Priority Values for Criteria Using AHP

S. No

Criteria Classification Top Management Support, Commitment & Encouragement Social Networks Vision and Goals Interpersonal Trust Open Leadership Climate Sharing Culture Data Management Capability Learning Orientation

Priority Abbreviations Values

1. 2. 3. 4. 5. 6. 7. 8.

TMSCE SN VG IT OLC SC DMC LO

0.367416 0.213835 0.168159 0.110097 0.0698852 0.027632 0.0236089 0.0193673

Consistency Ratio: 0.0878357 <0.10

Table 5: Judgment Data Matrix Criteria/ Suppliers Weights 0.367 I II III 7 8 2 0.213 4 6 5 0.168 7 7 9 0.11 6 6 5 0.069 3 4 4 0.027 8 8 7 0.023 5 9 8 0.019 4 9 9 1 5.871 6.92 4.681 TMSCE SN VG IT OLC SC DMC LO WSM SCORE

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APPENDIX I Pair wise Comparison Matrix

CRITERIA TMSCE SN VG IT OLC SC DMC LO

TMSCE 1 0.5 0.333 0.125 0.2 0.111 0.111 0.111

SN 2 1 1 0.333 0.2 0.111 0.111 0.142

VG 3 1 1 0.5 0.5 0.125 0.125 0.111

IT 8 3 2 1 0.5 0.25 0.111 0.111

OLC 5 5 2 2 1 0.5 0.5 0.111

SC 9 9 8 4 2 1 1 0.5

DMC 9 9 8 9 2 1 1 1

LO 9 7 9 9 9 2 1 1